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"One of the biggest reasons people upgrade their PCs is digital photos," Crow said, noting that Microsoft has been in contact with printer makers, digital camera companies and other unnamed industry partners while working on Windows Media Photo. Microsoft touts managing "digital memories" as one of the key attributes of XP successor Vista.

In his presentation, Crow showed an image with 24:1 compression that visibly contained more detail in the Windows Media Photo format than the JPEG and JPEG 2000 formats compressed at the same level.

Still, the image in the Microsoft format was somewhat distorted because of the high compression level. Typically digital cameras today use 6:1 compression, Crow said. Windows Media Photo should offer better pictures at double that level, he said. "We can do it in half the size of a JPEG file."

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Not only does compression save storage space, which is especially important for devices such as cell phones and digital cameras, a smaller file can also print faster, transfer faster and help conserve battery life on devices, Crow said. "Making a file that is smaller has all kinds of benefits."

The compression technology is also "smart"--it is possible to process only part of a huge, picture file to show a smaller version, Crow said. Additionally, Microsoft's new image format allows such things as rotating the image without the need to decode it and subsequently encode it again, he said.

The new image format was received with cautious enthusiasm by some of the WinHEC attendees. Ralf Mueller, an application planner at mobile phone maker Sony Ericsson, said he would look into the new format just as his company looked into supporting Windows Media Audio and Windows Media Video.

"Considering our development cycle, I could not see us supporting Windows Media Photo before 2008," Mueller said.

Steven Wells, a part-time professional photographer, said he sees promise in the new file format. "The JPEG artifacts make it almost unusable for professional photographers," he said. "Windows Media Photo is possibly the first viable compression format."

Yet, success will depend on adoption, Wells said. Microsoft will need to get players such as Adobe Systems and Apple Computer on board to win over the graphics professionals, he noted. A major unknown is licensing, which Microsoft has not yet addressed. "Licensing can kill this," Wells said.

Windows Media Photo was developed by the same people who worked on Windows Media Video and Audio, Crow said. The image format takes a new approach to compression as well as color space and color conversion, he said. Furthermore, it gives a lot of flexibility, including in the pixel format and bit rate, Crow said.

Microsoft has finished the first official version of the "porting kit" software needed to build support for Windows Media Photo into devices and platforms other than Windows. It should be available soon, Crow said.

Licensing details for the technology are still being ironed out. These could be a concern, Crow acknowledged, but "the philosophy has been that licensing should not be a restriction" to adoption, he said.